Rice Gets a Bath Amid California's Drought

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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As you read this, farmers in the Sacramento Valley are flooding hundreds of thousands of laser-leveled acres under five inches of water as they prepare to plant the annual rice crop. After that comes my favorite part. From the California Rice Commission’s “How Rice Grows” tutorial:

Rice seed is then soaked and loaded into planes. Flying at 100 mph, planes plant the fields from the air. The heavy seeds sink into the furrows and begin to grow.

They will keep growing throughout the hot valley summer (temperatures regularly top 100 degrees Fahrenheit), in the midst of a historic drought. Harvest comes in September, after which the rice -- mostly medium-grain, much of it destined for sushi -- will be milled and then shipped to customers, about half of them outside the U.S.

Even rice farmers get that there is something incongruous about this. “It’s hard to believe we’re growing rice in this semi-arid place,” Mike De Wit told me last month as he surveyed one of his parched, as-yet-unplanted fields with the Sacramento skyline -- also incongruous -- looming in the distance. But it works. The soil in the counties north of Sacramento where rice growing is concentrated is a thick clay that holds water well. “It’s basically a bathtub out there, and rice seems to thrive,” De Wit said. “Tomatoes or corn, they need lighter soil. This area grew sugar beets, but the sugar-beet industry in Northern California really went away. People have tried wheat and other crops, but rice seems to be the best.”

The hot, dry summer weather also produces great rice, less likely to be hit by the diseases that plague wetter, more humid rice-growing states such as Arkansas and Louisiana.

Still, you need a lot of water to grow it. Rice’s per-acre water needs, flooded fields and all, actually aren’t off the charts relative to other crops, but they are higher. Rice on average requires 5.1 feet of water applied per growing season, edging out alfalfa as the most water-intensive of major California crops. Multiply that times the 550,000 acres planted in a normal year, and you get 2.8 million acre-feet of water, or about 6 percent of the state's total consumption. That overstates rice's take a bit, as some of the water is reused after it sloshes off the fields or soaks into the ground. But it's clear that growing rice simply wouldn’t work in California without a lot of water.

Happily for the rice growers, most of them are clustered along the Sacramento River and its tributary, the Feather River, two of the state’s most bounteous sources of irrigation water. Unlike farmers in the San Joaquin Valley to the south who rely on contracts with state or federal water projects and will be getting little or no water this summer, many of the rice farmers possess rights to river water that predate these projects and were to some extent enhanced by them. Commercial rice farming in the Sacramento Valley dates back to 1912. The feds completed Shasta Dam on the Sacramento River in 1945 and the state built the Oroville Dam on the Feather River in 1968 with the idea of sending extra water south. The Sacramento Valley rice farmers got protection from spring floods and a more reliable summer water supply.

Rights holders in rice country still won’t be getting all the water they need this summer -- depending on where they are and how senior their rights are, some will get 75 percent of normal, some will get 50 percent, some will get less than that and some will get none at all. The feds and the state determine how much water is available, and local water districts handle the delivery. There’s no charge for the water itself, but landowners have to pay their share of their district’s expenses regardless of how much water they get.

De Wit rents rice fields in several different locations, and the one where I visited him was in a less-favored district that won't be getting water this year. His field does, however, have a shallow aquifer under it that shows no signs of depletion, so he’ll be pumping from that. The Sacramento Valley, even in the fourth year of a drought, isn't starved for water. At the north end of the valley, this hasn’t even been much of a drought year. Almost 49 inches of rain have fallen at Shasta Dam since last fall -- 78 percent of average -- and unlike most of the state’s peaks, 14,179-foot Mount Shasta is covered in deep snow. Shasta Lake, the state’s biggest reservoir, isn’t exactly full (it’s at 56 percent of capacity), but it has more water than this time last year.

Which raises a question: Given how dry it is elsewhere in the state, shouldn’t the rice farmers be selling some of that water? They aren’t entirely unwilling -- the Metropolitan Water District of Southern California cut deals this winter with a number of rice-country water districts to buy as much as 115,000 acre-feet of water (enough for about 230,000 households for a year) at $700 an acre-foot. But the deals were contingent on how much water those districts got, and most backed out as they got word that they won’t receive their full allotments, according to recent news reports.

One oft-stated reason for these decisions is that rice farmers are already fallowing about 25 percent of their acreage because of the drought, and cutting back planting even more than that would hurt local businesses that revolve around rice growing. As a matter of local politics and just plain neighborliness, this makes sense. As far as statewide economics, not so much. In California, rice is planted from airplanes and harvested with giant machines -- it’s not a labor-intensive crop. When Peter Gleick of California’s Pacific Institute set out a decade ago to calculate how many jobs were created relative to the amount of water used in various agricultural and industrial pursuits, rice came in dead last at one job per 1,000 acre-feet of water. Almond and pistachio orchards created six jobs per 1,000 acre-feet, fruit and vegetable crops 18 jobs and semiconductor manufacturing 9,013.

Another reason for not selling water is that water rights aren’t absolute. If you sell all the water you’re entitled to, many farmers fear, the state or the courts may eventually take those rights away. State officials have been doing what they can to assuage such fears and encourage water transfers, but worries understandably remain.

Then there’s the rice growers’ trump card. Much of California’s Central Valley (composed of the Sacramento Valley in the north and the San Joaquin Valley in the south) was once wetlands. The draining of the swamps that began in the 1850s was what enabled the valley’s blooming as the country’s most important agricultural region. It also destroyed millions of acres of wildlife habitat. Rice growers have figured out that, for birds at least, their flooded fields can function as surrogate wetlands. They now try to avoid insecticides in their farming, and make habitat preservation a major priority. State officials and many environmentalists have come to accept that rice fields play a crucial role in maintaining what’s called the Pacific Flyway for migratory birds. For this reason alone, California rice isn’t going away.

But still, does there need to be quite as much of it grown as there is? There’s no satisfactory answer to this. Rice is California’s fourth biggest crop by acreage, after almonds, alfalfa and grapes. And while there have been some significant ups and downs -- and the state’s peak rice year remains 1981, when 593,000 acres were harvested -- the overall trend has been up. During a drought in 1977 the number of acres harvested fell to 308,000. Last year it was 431,000.

This is the way of California farmers. They don’t just grow stuff, they grow it in huge quantities with ever-increasing efficiency (rice production has grown much faster than acreage), then they band together to find new markets for it. In the case of rice it hasn’t just been advertising and marketing, but also a decades-long diplomatic campaign to get Japan to open itself to rice imports. Such efforts in almost any other industry would be universally applauded; it can seem a little unfair that entrepreneurial, market-savvy behavior in agriculture is so often derided as corporate or industrial farming.

Still, you can’t quite say that the market determined that 550,000-odd acres of California farmland should be planted in rice. As described above and in this Bloomberg View editorial, California’s water markets are something less than functional. The rice farmers generally qualify as water-rich, but they have limited opportunities to take advantage of those riches other than by planting rice. Rice is also one of the few major California crops that gets federal agricultural price-support subsidies. Those subsidies have been piddling in recent years because rice prices have been high, but overall the price supports surely induce farmers to plant more rice than they would otherwise.

Then again, the value of rice fields as wetland stand-ins probably isn’t fully reflected in the returns to growers. There is no simple equation here -- just a lot of fields, buried in 5 inches of water, in the midst of a drought.

Which is almost 38 degrees Celsius.

The six major rice-producing states in the U.S. are, in order of acreage harvested in 2014, Arkansas, Louisiana, California, Missouri, Mississippi and Texas. Most years, though, California is in second place.

As I've written before, the fact that farms use lots of water in relation to their economic impact is not an argument for driving them out of the state.

If you count pasture for livestock grazing as a crop, rice comes in fifth.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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